Forward Air-Omni merger dustup heads to trial Friday
A merger dispute between Forward Air and Omni Logistics will finally be heard in a courtroom on Friday. The Delaware Court of Chancery will be tasked with determining if Omni breached the deal agreement by failing to meet certain pre-closing conditions and if it misrepresented financial projections as Forward has alleged.
Omni filed suit against Forward at the end of October, saying the less-than-truckload company was seeking to unjustifiably terminate the merger because of the backlash it had received from investors, who were miffed they wouldn’t be afforded a vote on the deal prior to closing. Shortly after the Aug. 10 deal announcement, shares of Forward dropped more than 40% and are now just half the pre-deal value.
Omni claims Forward (NASDAQ: FWRD) has manufactured an alleged breach of contract by falsely accusing it of dragging its feet in response to requests for financial information. It also said Forward has misrepresented earnings projections it provided. It maintains it has acted in good faith and completed all pre-deal requirements.
Forward alleges Omni failed to provide timely disclosure of financial updates and that its 2023 projections are below those previously reaffirmed with lenders. Citing the alleged breaches, Forward has asked the court to let it out of the deal.
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Much of the trial will center on financial projections and whether Omni was delinquent in providing required financial updates to Forward.
Forward told its lending group that it expected Omni to generate $167 million in adjusted earnings before interest, taxes, depreciation and amortization during 2023. The projection was reaffirmed to lenders on Oct. 2 as Forward was closing on a $725 million notes issuance, which is part of the $1.85 billion debt package needed to fund the transaction. However, Forward claims Omni CEO J.J. Schickel showed Forward Air CEO Tom Schmitt a slide displaying a 2023 EBITDA projection of just $111.2 million at a breakfast one day later.
Source: freightwaves.com
